(New York Times) – Lawmakers say they want to stop United States companies from reincorporating overseas to lower their tax bills, but the Obama administration and Congress appear unlikely to take any action to stem the tide of such deals anytime soon.
On Tuesday, Treasury Secretary Jacob J. Lew sent letters to the top members of the House Ways and Means Committee and Senate Finance Committee, urging Congress to take immediate action to halt the rush of companies abroad. Yet the wave of so-called inversions looks set to continue unabated as a partisan Congress remains gridlocked, and Wall Street advisers continue encouraging companies to strike such deals while they still can.
In recent months, several big companies have reached deals that will allow them to reincorporate in countries like Ireland and the Netherlands, where corporate taxes are lower. This week alone, two such arrangements appeared sealed, with AbbVie, the drug maker based in Chicago, winning tentative approval from Ireland-based Shire for a $53 billion acquisition; and Mylan, the generic drug maker based outside Pittsburgh, paying $5.3 billion for the European assets of Abbott Laboratories.
Mr. Lew said he hoped the administration could address the issue through broad corporate tax reform. But absent that, he encouraged congressional leaders to act before more companies made similar moves.